28 january 2009

Prime Minister Vladimir Putin answers questions from the audience at the opening plenary meeting of the Davos forum


Question (as translated): Mr Putin, you have warned against excessive Government intervention into all that. I am stunned to hear you say so. It would have never occurred to me a mere six months ago that you could say it. I fully agree with your point. Now for my question. 

Let us take information technologies. You have made tremendous strides in this field. You have given computers to schools and the Government, which is on the Internet now. All of Russia has access to the Internet. As for gifts for research and technology, there is an opportunity to use IT to greater effect. What can we in the IT sector do to help you in expanding the Russian economy?

Vladimir Putin: The thing is that we don't need help. We are not disabled. It is the poor people of limited means, pensioners, and developing countries who really need help. This help should not boil down to money donations that might generate another stage of poverty. What is really necessary is a change of terms in world trade. Why are WTO talks in a deadlock? The reason is that prosperous countries refuse to make concessions on certain issues to guarantee the progress of developing economies. That's all there is to it. We must be outspoken about it, and work for compromises.

As for Russia and its partners in Europe, the United States, and certain Asian countries, equal partnership is the only thing we want. Our economies are mutually complementary in many respects. We have really done much to implement information technologies in everyday life. The idea of computer networks and access to the Internet in a tiny Siberian village was, until quite recently, implausible. It is a reality now-we have done it through a federal programme. Every Russian school-I really mean every, wherever it might be, in Siberia, the Far East, northern or southern Russia-has computer classes and access to the Internet. IT implementation will go on because economic and social development makes it a must. Unlike in certain countries, it never occurs to anyone in Russia to limit access to the Internet. It is a site of opinion exchanges with absolutely open portals and information sources. Some things there are good and some bad. Not everything is to everyone's liking-but absolute freedom reigns there.

As for the state's intentions, we have the federal programme Electronic Russia. We are determined to develop it independently, though in contact with our partners. We will welcome relevant investments as before and promote our products in transnational markets. Many Russian companies are major operators of, say, cellular telephones in other fairly developed national economies. We will promote similar high-tech exports in the future. I think many of our interests coincide in this field, too. We will surely find enough. Many Russian companies are engaged in this sphere-I will not enumerate them now. Their work concerns not so much hardware supplies as intellectual products. Here, we have much to offer. You are perfectly right about it, and I thank you for your hint. The excellent development of mathematics in Russia is rooted deep in our history. Our programmers are doubtless among the best in the world. I don't think anyone has any objections to this-even our Indian colleagues. So let us work together.

Question: Mr Putin, you have staunchly promoted Russian companies as industrial and energy champions. Some of those new companies are facing the challenges of the crisis now. Will you support them? How and under what conditions? What are your other priorities?

Vladimir Putin: Many countries of the world establish and promote such national champions. We have several such companies. Everyone knows Gazprom, but there are other companies, too, and not only in the energy field. If we concentrate on this field, there is Rosneft (with state participation), the absolutely private LUKoil (with transnational participation), and other corporate giants of a European and even global scope. We will certainly support them. First, we will reduce taxes-as we are doing already.

We have reduced the tax burden on the energy industry and will make further cuts. We have reduced the profit tax rate from 24% to 20%, which mainly concerns champions.

We will help them if need be. We are helping them even now with loan refinancing, which mainly concerns foreign loans. We have earmarked $50 billion for this purpose and established a special agency to assist such companies. Allocations are coming already. I cannot specify their extent now but the work is going on. I see the proprietors and control holders of those companies here. They know the matter implies dozens of billions of dollars.

Western financial agencies know that we support our major companies. In fact, we are enhancing the liquidity of European financial agencies, which are experiencing serious problems. Our economic policy is not limited to that. We are supporting small and medium-sized enterprise, and we will do so in the future.

True, we are increasing import duties of certain ready-made equipment to promote Russian manufacturers-but I don't think we are extremists in this respect. We are also reducing and even abolishing import duties for technical equipment, especially of the kind Russia is not manufacturing, thus promoting Russian industrial advancement. This support concerns not only the big businesses you call "champions", but also small and medium-sized businesses. We have raised bonus depreciation by 10-30%, which also concerns the entire national economy.

We have passed a bill to entitle regions to the right of reducing the taxation of small and medium-sized businesses from 15% to 5%. We have established funds for the support of such businesses. They function either through banks as they receive federal finances or through regional agencies. We will support small and medium-sized businesses in every economic branch on our priority list, farming being no exception. This support has a tremendous scope. I don't think I need to quote figures here. Top priority belongs to agriculture, considering national and global food security. I mean to indicate that Russia is increasing its contribution to the settlement of this problem.

So, you see, our efforts have many aspects and concern many fields. We will stay true to this principle in the future.

Question: You said in your address that it was high time to get rid of virtual money and turn to industry. We producers of consumer goods welcome this idea as representatives of industry. Russia and its growing middle class are without a doubt one of the largest and most attractive markets in the world. Thus, if you ask me what problems Russia has, I will say that supply distribution is the worst. It is especially bad outside Moscow and St Petersburg, because distribution combines the old and the new-two extremities extremely close to each other. I want to ask you, first of all, what opportunities there are to create the necessary infrastructure and speed up the development of trade. What could be done to promote consumption and employment, which are essential to our industry? Last but not least, you have said that the financial system is weak. What if money does not reach the entire supply system from farmers to consumers? That is what I want to know.

Vladimir Putin: You ended by mentioning farmers, and I want to give you a signal on behalf of farmers-I mean you as a person involved in product distribution. Money is getting neither from banks to traders nor from traders to farmers, and so I agree with your criticism of bankers, and will stress that we are trying to influence them. I also want you to inform you of what grudges farmers bear against traders.

This does not exonerate us from responsibility for transportation and financial infrastructural development. We have long intended to strengthen and enlarge the financial sector. The current situation in global and, consequently, Russian finances certainly encourages us to act more quickly in this respect. We will do it. We will retain accuracy with it due to the specifics of the Russian financial system. As you have said, work gets more complicated the farther it is from megalopolises, but at the same time, regional banks are very active in the remote parts of the country, and we will also support those regional banks that remain afloat today.

As for transportation infrastructure, we realise full well that it cannot develop rapidly enough in a country as vast as Russia, even though the target allocations we have earmarked are beyond comparison with what Russia and, before it, the Soviet Union, previously spent on this purpose. Thus, we will work on and improve the terms of enterprise, including what you have mentioned. I consider it very important, and it has earned its reputation for stability and good performance in Russia. Its development satisfies us, and you can be sure that we will find the ways and means of promoting it.